Indian Electronics Market: An Amplifying Market for SMEs

Updated: Oct 16, 2020

The world's fastest developing industry, Electronics System Design and Manufacturing (ESDM) keeps on changing lives, organizations, and economies over the globe. Innovation transitions, for example, the rollout of 5G organizations and IoT are driving the quick adoption of gadgets items. Electronics manufacturing in India has been growing quite significantly with an expected growth rate of 30% per year, for the next five years.

Mobile manufacturing in the country has grown from 6 crore handsets five years ago to 33 crore at present, and over 90% of country’s mobile phone requirements are met through domestic production. Innovative ideas, for example, 'Digital India' and 'Smart City' ventures have raised the interest for IoT in the market and will without a doubt introduce another new period for electronic gadgets and goods. One of the largest electronics markets in the world anticipated reaching $400 bn by 2025 with various foreign electronics companies, from sectors ranging from mobile phones to medical devices, are actively pursuing plans of setting up manufacturing in India.

Promising startup activity in the electronics area with dynamic teams looking at product development in Electric Bikes, Charging Infrastructure, IoT, Health-Tech, Drones, Robotics and so on are also on the rise in the domestic market. Indigenous consumer electronic sales numbers across classifications, for example, cell phones, workstations, TVs, fridges and washing machines through internet business stages developed by as much as 17%, as shoppers selected online portals and avoided physical stores even after the lockdown was lifted in many parts of the nation.

  1. The Covid pandemic has increased the already set transition of manufacturing units from China to India. With all these changes, the nation can present itself as a serious contender in the overall global footprint of the companies to manufacture components, as well as finished goods for both domestic consumption and export to other markets.

  2. There would be need for updated and new quality performance in the electronics landscape and some of them would be around IoT, Automation, Remote Communication Systems, Surveillance and Industry 4.0. Various schemes and initiatives announced by the government such as Digital India, Start-up India, NPE 2019 and many more will offer a more conducive environment for electronics manufacturing and skilling.

  3. The government is firming up a plan to offer incentives for companies looking to shift manufacturing units out of China. The benefits will be on the lines of those given to manufacturers of electronic and medical devices. These may include production linked incentives and capital expenditure benefits. The Indian market hence has abundance of opportunities for those who are willing to invest in this sector.

  4. The consumer and industrial electronic components in India, given the trade ban and restriction on Chinese goods witnessed a surge in the demand and as per CRISIL reports only 300 MSMEs are present in India that manufactures such components. This certifies the need of more SMEs in the local production of LED bulbs, panels, chipsets, semiconductors etc.

  5. With the de-licensing of the entire consumer electronics industry and the removal of the restrictions on foreign investments, almost all the important global players like Thomson, Sony, National, LG and Samsung have entered in the Indian Industry. These companies are in active search of local SMEs to collaborate in manufacturing or assembly of their electronic devices like LED screens, music players, Air conditioners, IOT enabled refrigerators etc.

  6. Technology is the backbone of the electronics market in India. Rise in R&D related SMEs focusing on improving technical aspect of LED panels and semiconductor chipsets can reduce the dependency on technology imports from other countries like Korea or Japan etc which government is keen on implementing.

  7. As many as 22 domestic and international firms, including iPhone maker Apple’s contract manufacturers as well as Samsung, Lava, Dixon and so forth, have lined up with proposals for mobile phones production worth Rs 11 lakh crore over the next five years in India promising a boom in the local manufacture of handsets or parts of handsets like chipset, memory card etc.

  8. Domestic brands like Godrej has taken the pandemic period and trade ban as a sign to collaborate with smaller Indian enterprises for complete production of electronic goods like ACs, Security locks, Electronic safe deposits etc and reducing their dependency in Chinese imports.

  9. Video monitors, players, cameras, digital surveillance equipment's, home audio systems, Automotive electronics are some of the areas where the need to bring in domestic enterprises is necessary than ever. Indian government is bringing out schemes like modified electronics manufacturing clusters (EMC 2.0), National Policy on Electronics 2019 and collateral free automatic loans to encourage more and more SMEs to enter the field of manufacturing electronic products.

The recent production linked incentive schemes for large scale electronics manufacturing, will boost the ‘Make in India’ and ‘Assemble in India’ campaigns of the government. The market is constantly overflowed with most recent advances and developments. Nonetheless, product lifecycle is very short, as buyer interest change quick. Consequently, numerous advances and developments regularly wind up vanishing within a limited period of time thus opining on the fact of an ever renewing demand. The dividing line between developing the innovation for widespread use and its obsolescence because of new innovation is razor-thin encouraging many smaller enterprises to function with a flexible supply chain to accommodate the changes and function accordingly.

Subsequently, speed in assembling and dispatching the electronic items is basic agenda in this area giving the adrenalin rush to the sector and luring more and more entrepreneurs into the sector.

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